Some financial services firms are not meeting all requirements when it comes to consumer protection, a new study by the Financial Regulator has found.
The Financial Regulator today published the findings of three inspections into mortgage intermediaries and insurance firms. The Financial Regulator began the inspections last year to determine whether the firms are complying with the Consumer Protection Code.
Inspection into mortgage intermediaries
In its review of 20 mortgage intermediaries, the Financial Regulator found that in a number of cases firms did not appear to be conducting sufficient research into the consumer's ability to repay.
'There was evidence that firms appeared to rely solely on the mortgage lenders' criteria for assessing ability to repay and suitability for a mortgage,' the report said. According to the Code, intermediary firms must satisfy themselves that a product they recommend is suitable for the consumer's circumstances.
The Financial Regulator also found that a number of firms were producing vague and generic statements of suitability for clients, when each individual consumer's specific circumstances should be reflected when the firm was deciding what product would be most appropriate or suitable.
In addition, the Financial Regulator found that appropriate documentation on individual clients was not always maintained in the files, and that some intermediary firms were not taking full responsibility to comply with certain sections of the Consumer Protection Code.
Inspection into home insurance claims
The Financial Regulator inspected the eight largest firms in terms of the number of claims processed during its inspection into home insurance claims. The firms chosen were responsible for over 98% of the claims processed during the review period.
The main finding of the home insurance inspection was that while the majority of claims are processed in line with the requirements of the Code, there were a small number of cases where claims cheques were not issued to claimants within 10 business days, as required.
It was also found that some firms only allow claims to be settled using the firms' approved repairers. The Regulator said that firms must ensure that their use of approved repairers is consistent with the Code and they must ensure that consumers are aware of this at the time of entering into an insurance contract.
Inspection into motor insurance renewals
Nine firms, representing the largest firms in terms of motor insurance, were inspected by the Financial Regulator in relation to motor insurance renewals.
The Financial Regulator was encouraged by findings that firms are processing motor insurance renewal documentation in line with regulatory requirements.
However, there were a very small number of cases where the 15-day rule for issuing renewals had been breached. There were also some instances where the actual renewal documentation issued did not contain some information required by the regulations.
